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The Bad Mortgage Loan Merry-Go-Round: Turn, Turn, Turn

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Today I’d like to share some facts, and not necessarily my personal opinions.

Well, I’d like to share some facts and ask a couple important questions. It’s now February 2016, just for the record.

But here’s a quote from a September 5, 2011 article by Dan Burrows on CBSNews.com, which is titled, “Feds Sue 17 Wall Street Firms Over Bad Mortgages”:“The Federal Housing Finance Agency (FHFA), which oversees crippled mortgage giants Fannie Mae and Freddie Mac, claims the Wall Street firms sold nearly $200 billion in risky home loans to the mortgage companies without adequately disclosing their risks.

“The suits claim Bank of America (BAC), Citigroup (C), Barclays (BCS), Goldman Sachs (GS), HSBC (HBC) and Nomura (NMR), among many others, misrepresented the quality of the mortgage securities they created and sold during the housing bubble.”

Most of us remember that the previous year, in 2010, Goldman Sachs was charged with fraud by the SEC. Here’s a quote from the April 16, 2010 announcement on SEC.gov:

“The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.”

And on August 22, 2014 the Wall Street Journal (wsj.com) reported the following:

“Goldman Sachs Group Inc. settled a U.S. housing regulator's lawsuit for about $1.2 billion, resolving claims the Wall Street firm failed to disclose the risks on the mortgage bonds it sold before the financial crisis.”

Goldman Sachs is an investment firm, and it is busy making investments today, to produce profits for its investors. So, see what you think about this quote from the February 10, 2016 article by Ben Lane on HousingWire.com, which is titled, “Goldman Sachs subsidiary buys massive NPL portfolio from Fannie Mae”:

“Fannie Mae announced Wednesday that it selected the winning bidders in its latest sale of non-performing loans, with a subsidiary of one of Wall Street’s biggest names among the winning bidders.

The total sale included four pools of loans that total $1.32 billion in unpaid principal balance spread across 6,540 loans.

The winning bidder for two of those pools, representing 2,068 loans that carry an unpaid principal balance of $418,414,683, was MTGLQ Investors, L.P., a ‘significant subsidiar’ of Goldman Sachs.

According to the Securities and Exchange Commission, Goldman Sachs owns, directly or indirectly, at least 99% of the voting securities of MTGLQ Investors, L.P.”

Ladies and Gentlemen, do you see a pattern here?

Do you agree with the politicians and citizens’ groups organizing to protest the government’s sale of bad loans to private investors?